Fair tax debate

A number of documentaries aired on TV recently have really stemmed my interest in the topic of ‘Fair Tax’ and the fascinating debates surrounding loopholes and getting around the system. I've known many a person complain about how much they hate having to pay tax and the amount deducted from their pay cheque, but for businesses, it is a very different story and there are very different rules.

Tax Heavens are often used by large multinational corporate business to move funds offshore to avoid paying tax, but within UK legislation, giving them an advantage that smaller independent local competitors are not entitled to. The programme 'The town that took on the Taxman' demonstrated a simplified model of how the system worked and suggested what issues the state would face if all businesses were to follow in the same footsteps and use this get-out. They showed how unfair and unequal the system is and the fight that small independents have against these discrepancies. It highlighted how the suggested £35 billion can easily be avoided from being processed by the British Treasury and challenged these business to prove what benefit can be gained from everyone paying fair taxes

Something I found particularly interesting surrounded a claim that Britain’s leaders were responsible for setting up such tax havens, like the Cayman Islands, where one building is home to just short of 20,000 companies. As tax havens tend to be wealthier countries, it was alleged that Britain planned to take advantage of this in BBC’s Britain's Trillion Pound Paradise.The issue they faced however, was that the money accumulated in places such as Cayman isn't accessible to its citizens and it creates more of a divide between the rich and those in poverty. The contribution we make to society is vital to the environment we are accustom to and the services we receive; education, healthcare, transportation links, and our infrastructure as a whole is dependent on what we pay.

In an article in The Guardian, Chas Roy-Chowdhury (Head of Taxation at the Association of Chartered Certified Accountants) makes a valid point on; how do we pin down what is a fair tax rate? “There are all sorts of dynamics that come into it and even tax experts wouldn't necessarily agree with each other." Kevin Nicholson (PWC Head of Tax) looks at the counter argument for businesses operating in this way as “businesses are not just operating across borders. They are global and commercially they are looking to centralise the holding and development of intellectual property (IP)… All aspects of the business need to be run efficiently on a global basis to compete with other businesses operating in the same way."

So how do we get the right balance? I think it partly comes down to us as consumers, to support and purchase goods and services from those business that pay what they owe and share the value in paying taxes. I'd love to hear your thoughts in the comments below.

If you would like the discuss the state of tax even further, please contact me on 0161 834 1642 or email stephanie.dowson-park@sellickpartnership.co.uk

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